Tesla Admits Delay In Its Own EV Battery Production

Tesla, Inc. is falling short of CEO Elon Musk's objective of producing its own next-generation batteries, raising concerns about the top electric car maker's ability to maintain its blazing expansion of auto production next year and beyond, according to Reuters.

Photo Insert: Tesla is the only major carmaker that manufactures batteries without partnering with suppliers, while it, like other companies, purchases batteries from companies based primarily in Asia.

Tesla said on Wednesday that it would rely on suppliers to supply battery demand this year, citing the need to master new technologies as a barrier to increasing its own battery production.

Tesla is an exception in its sector; it is the only major carmaker that manufactures batteries without partnering with suppliers, while it, like other companies, purchases batteries from companies based primarily in Asia.

Batteries are the most expensive component in electric vehicles, so lowering their price is critical to increasing EV popularity.

If Tesla succeeds, it will ensure a steady supply of cheaper, longer-lasting batteries, laying the groundwork for its own ambition of producing 20 million vehicles per year. However, such new batteries are required next year to avert a supply shortage as the worldwide industry ramps up electric production.

Ford Motor Company, for example, announced a significant new partnership with Chinese battery maker CATL on Thursday. According to Benchmark Mineral Intelligence (BMI) analyst Caspar Rawles, "time is running out and that end of the year deadline is fast approaching, meaning the company will need to work quickly to resolve the remaining issues to meet the volume they need."

The new batteries are known as 4680s, which refers to their diameter (46mm) and height (80mm). They are significantly larger and contain more energy than the present 2170 batteries, reducing cost.

Tesla is also developing a low-cost new battery manufacturing technology known as dry battery electrode. "Our focus right now is on the dozens of little issues that inhibit the production ramp of the 4680," Musk said on a conference call following the company's quarterly results on Wednesday.

"When something is revolutionary, there's a lot of unknowns that have to be resolved," he remarked, referring to the dry battery electrode method. "So we're confident of resolving those unknowns but it's very, very difficult," he added, concluding that progress is being made quickly.

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